These are cryptocurrencies designed based on memes and other internet jokes.
The Long Explanation
A cryptocurrency, just like Bitcoin, is designed by taking inspiration from a meme – a funny idea represented in the form of an image, video, or other media forms.
Though these cryptocurrencies are meant as a joke, they still have the potential to become popular and garner some value (often overnight!) when community members buy into the memecoins due to the fear of missing out (FOMO).
The value of certain memecoins is boosted further by celebrities, popular internet sensations, and also by retail investors.
However, memecoins are extremely volatile, meaning they can face extreme changes in their value within a short period. For instance, when a new memecoin hits the market, the attention of traders automatically moves to it, which causes the value of the one that’s already on the market to slump unexpectedly and drastically.